Production Linked Incentive Scheme March 2022 home.kpmg/in
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Vision behind PLI Scheme
01 Atmanirbhar Bharat & Make in India
02 Focus on building manufacturing ecosystem in India
03 Aim to make India an export hub
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Attract investment in core competency areas
Help India be an integral part of global supply chain
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PLI Scheme Simple and direct incentives based on incremental sales
Focus on attracting large investments
Key features of PLI Schemes
Non-tariff measure to compete more effectively with cheap imports
Simplified application procedure
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Objectives & Expectations Objectives
Select few and make them torch bearers Identify sectors and products Unique evaluation - percentile Empowered bureaucracy Other benefits continue
Expectations • Incremental turnover: ~ USD 500 bn • Investment: USD 30 bn by FY25 • Global scale production facilities • Export promotion & import substitution • Align industrial development with global trends including ESG
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General parameters Sector specific Fixed Threshold Investment Incentive on Net Incremental Sales or cost reimbursement Requirement to meet the prescribed domestic value addition
Conditions regarding exports to be fulfilled, depending on scheme to scheme
Cumulative employment generation Manufacturing capacity & extent of integration Minimum Compound Annual Growth Rate (CAGR) in sales Specified category of products with minimum sales
* Please note, these are general parameters of a particular scheme and actual parameters vary from scheme to scheme © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
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Why evaluate PLI Total identified 14 sectors
Substantial incentive percentage
Adequate budgetary provision
Re-engineering supply chain
Competitor analysis – If not me someone else
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Status of PLI Schemes Large Scale Electronics Manufacturing Closed
Information Technology Hardware Closed
Food Processing Industry Closed
Automobiles & Auto Components
Manufacturing Of Medical Devices
Advance Chemistry Cell (ACC) Battery
Closed
Closed
Pharmaceuticals Drugs 2.0
Telecom & Networking Products
Closed
Closed
Closed
Textile Products: MMF Segment and Technical Textiles
Semi-conductors and display fabs
High Efficiency Solar PV Modules
Closed
Closed
Design-led manufacturing for augmenting infrastructure for 5G
Specialty Steel Open
Pharma 1.0 API/KSMs/DIs
Closed*
TBN
Drones and Drone Components
Open for specified APIs
White Goods (ACs & LED)
Open
* Likely to be re-opened © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, Open/Closed/TBN (To Be Notified)
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Success of notified PLI schemes Resounding success of PLI schemes PLI schemes have been a huge success
Large no of applications received from various players
Significant investments committed by applicants
Augment production and raise direct employments
Selected Applicants of Key PLI schemes •
Large Scale Electronics Manufacturing: 16 applicants selected including Samsung, Foxconn, Pegatron, Lava, Micromax
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Auto: 95 applicants selected for OEM Champion and Component scheme including Suzuki Motors, Mahindra, Maruti Suzuki
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Pharmaceuticals: 55 applicants selected including Sun Pharmaceutical, Dr. Reddy’s Laboratories, Lupin
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Food: Total 143 applicants selected including Britannia, Haldiram, ITC, HUL, Nestle, Dabur, Parag Milk Foods
•
IT Hardware: 14 applicants selected including Dell, ICT, Rising Stars, Lava, Dixon, Micromax
•
White Goods: 42 applicants selected including Daikin Airconditioning, Hindalco Industries, Havells India
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Boost to Conventional and Unconventional players Conventional Players
Unconventional Players
» Samsung
» Axis Clean Mobility Private Limited
» Maruti Suzuki India Limited
» Booma Innovative Transport Solutions Private Limited
» Foxconn » Dell
» Elest Private Limited
» Britannia Industries Limited
» Hop Electric Manufacturing Private Limited
» Nestle India Limited
» Ola Electric Technologies Private Limited
» Cipla Limited
» Powerhaul Vehicle Private Limited
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Picture so far 01
Initial plan of the Government • PLIs announced for 13 sectors • Incentive earmarked INR 1.97 lakh crores or USD 26 bn
Actual Plan • Total PLI schemes announced till date: 13+1
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• Revised incentive earmarked: INR 2.92 lakh crores or USD 38.2 bn • Applicants selected: ~500 across PLI schemes • Investment committed by applicants: INR 3.86 lakh crores (includes committed and expected) • Range of incentives as a percentage of turnover: From 1%-50%
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Future plan • PLIs still open: Drones, Pharma 1.0, Steel, White Goods and Solar (additional outlay) • Scheme yet to be announced: Design led manufacturing for 5G • Sectors still to be tapped: Aerospace, Defence, R&D, capital goods etc. © 2022 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
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Thoughts for the road PLI to be looked in the context not in isolation •
Income tax rate – New manufacturing companies eligible for reduced rate of 15%
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Removal of SEZ holidays – WTO impact
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Phased manufacturing programmes – selective tariff incentives
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State incentives, sectoral schemes by Central Government
Not a one-time programme •
Budget not exhausted
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Government focus on capex in budget 2022
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Need to align sector objectives with Government objectives
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Focus not only on Centre, but also on States
Active interaction with Government is the key
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Q&A
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